Why Is Facebook Stock Price Dropping?

Facebook share price lost 22% as Q3 revenue guidance fell in the Q2earnings release, Facebook tock price then fell another 15% in the three months after. Analyst saw the initial 22% drop as extreme due to the steepness of the drop.

Facebook share price finished the last trading day at $148.68, which was down 1.11% from the previous day’s trading. On the same day both the DOW (+0.76%) and S&P 500 (+0.56%) made gains, with the Nasdaq falling 0.38%.

Today, we see the Facebook stock price drop by a significant 5.35% in the past month. The tech sector was down as a whole, with Computer and Technology market dropping by 8.65%. In the past month, the S&P 500 has dropped by 6.76%.

As the next earnings report for Facebook comes over the horizon, investors will be hoping that Facebook shares can make a bounce-back.


Facebook Stock Analysis

For Facebook’s next quarterly report (coming January 30, 2019) analysts have forecasted NASDAQ: FB to reach earnings per share of $2.19. If Facebook does meet this forecast, then it would mean that there has been a year-on-year decline of 0.45%.

The analyst estimates are subject to change when the analyst is presented with news to counter or solidify a current notion relating to a company. So, if positive news regarding Facebook presents itself before the next quarterly report, then analyst forecasts may become more positive.

Facebook’s earnings report is representative of past challenges the company has faced, such as the Cambridge Analytica scandal.

The real issue for Facebook comes in the form of taxes, most investors did not bat an eyelid when billion dollar fines hit a tech company they invest in. Because of the sizable cash flows that large tech companies boast, fines are not a big deal. Although, taxes are a different matter entirely, mainly because of the permanent nature of taxes. New taxes will cause Facebook and other internet companies profitability to lower considerably. This means that Facebook stock also taxes to content with.

In the U.S, no digital tax has been imposed yet. The fear from investors is that is Europe starts using the digital tax, then the United States would soon follow.


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